​Gas talks stall because Kiev has little ‘grasp of reality’

The Russian gas supply to Ukraine may be cut off on Monday after Kiev rejected all concessions offered by Moscow to settle Kiev’s gas debt. Chances are that the Ukrainian government is simply acting irrationally, some analysts say.

Kiev has not been paying for gas it imports from Russia for
months, resulting in a multibillion dollar debt mounting. Russia
says that it would invoke the prepay option of the standing
contract and would only deliver as much gas as Kiev pays for in
advance starting Monday. With Ukraine not willing to pay, this
would mean an effective cut-off.

Russia offered a $100 discount to gas price roughly to the level
that the Europeans pay. The offer includes recalculation of the
current debt, which would revalue gas supplied since April with
the discount applied, but Kiev rejected this plan, saying it’s
not good enough.

“Ukraine has been offered a very generous discount and yet
they still want more. It really is quite incredible – the nerve
and the chutzpah of the Ukrainian government in all this. I don’t
think any amount of discount would really satisfy Ukraine. They
are spoiling for a fight here,” believes journalist Neil
Clark.

Instead of compromising and settling the debt, Kiev seems to be
preparing to raise the stakes. Over the past few months it has
been pumping as much unpaid Russian gas into its underground gas
storages as it could and now says it has enough to last till
autumn.

Kiev’s desire to dictate the terms to Russia may have an
irrational basis underneath, international law expert Alexander
Mercouris told RT.

“It is difficult for the Ukrainians at this time to negotiate
with Russians about anything. There are many people in Kiev who
don’t like that,” he said.

“One of the fundamental problems with the way in which the
Ukrainian authorities have been dealing with their multiple
crises since they took power in February is that they don’t seem
to show very much grasp of reality,” he added.

There are also concerns that Kiev would eventually simply siphon
off gas it transits from Russia to European consumers, as was the
case during previous rounds of gas stand-offs.

A more distant problem will arise in winter. Normally Ukraine
would accumulate gas intended for Europe in summertime and
deliver it in winter, because that’s how the Ukrainian gas
pipeline system is designed. With gas from the storages use for
Ukraine’s own consumption, there would simply not be enough for
Europe next winter.

“The Ukrainian government has been intransigent and putting
the people of Europe at risk. That’s why the EU is actually
cautiously supporting Russia’s position at this time,”
political analyst Bill Dores told RT.

Ukraine has for years enjoyed a politically motivated preferred
treatment by Russia in terms of gas price discounts, he added.
Now there is a government in Kiev hostile towards Russia, and
Moscow has no reason to support it.

An escalating conflict would hurt all the three parties involved.
But the Ukrainian government may be tempted to raise the stakes
now, said Mercouris.

“There is an expectation that once things are deteriorating
in Ukraine, it could be blamed on the Russians,” he
explained.

With Ukrainian economy already in peril, painful austerity
measures demanded by international creditors in exchange for
loans and a political turmoil in the eastern provinces, Kiev has
loads of blame to apportion in the future.